Impact of bank mergers on shareholders’ wealth

Article


Juma, Odero Naor, Wawire, Peter T., Byaruhanga, John, Okaka, Ochieng and Odera, Odhiambo. 2012. "Impact of bank mergers on shareholders’ wealth ." International Journal of Business and Social Research. 2 (6), pp. 162-177.
Article Title

Impact of bank mergers on shareholders’ wealth

ERA Journal ID200033
Article CategoryArticle
AuthorsJuma, Odero Naor, Wawire, Peter T., Byaruhanga, John, Okaka, Ochieng and Odera, Odhiambo
Journal TitleInternational Journal of Business and Social Research
Journal Citation2 (6), pp. 162-177
Number of Pages16
Year2012
Place of PublicationMaryland, USA
ISSN2164-2540
2164-2559
Web Address (URL)http://www.ijbsr.org/images/archive_articles/November2012/13.pdf
Abstract

Mergers and acquisitions (M&As) perform a vital role in corporate finance in enabling firms achieve varied objectives and financial strategies. This study sought to comprehend the impacts that previous bank mergers have had on the shareholders’ wealth. The study location was in Kenya and it adopted the descriptive survey and correlation design in which the success of mergers was measured based on the objective oriented model using the annual accounts. The study computed the return on assets (ROA), return on equity (ROE) and the efficiency ratio (EFF) as indicators of shareholder value. The results of the commercial banks were analysed for a five-year period (2006-2010). The study reveals that mergers significantly influence shareholder value with banks that have undertaken mergers creating more value than those that have not. Such banks were ascertained to have posted better results than the overall sector.

Keywordsbank mergers, acquisitions, shareholders’ wealth, Kenya
ANZSRC Field of Research 2020350202. Finance
350204. Financial institutions (incl. banking)
350299. Banking, finance and investment not elsewhere classified
Public Notes

http://www.ijbsr.org/index.php/journal-archive/177-v2n6a13. Open access journal. Authors retain copyright.

Byline AffiliationsMasinde Muliro University of Science and Technology, Kenya
University of Science and Technology, Kenya
School of Accounting, Economics and Finance
Institution of OriginUniversity of Southern Queensland
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